The commission had increased AIX's bonding from $200,000 (the old requirement for more than one well) to $1.6 million based on requirements in its new regulations, which went into effect in July, and set bonding at $400,000 per well for one to 10 wells.

In July, AIX requested a reduction to $1,037,166, based on a third-party engineering cost estimate to plug and abandon its four gas wells.

In August, AIX requested reconsideration based on other bonds in place with state agencies.

The commission held a hearing on the reconsideration request in February.

AIX has a bond in place for dismantlement, removal and restoration with the Department of Natural Resources and the company said that bond included an unspecified amount intended to cover P&A costs of its wells.

AIX also said it should get an offset for the $950,000 certificate of deposit it has in place with the Mental Health Trust Land Office which is dedicated to P&A of AIX's four wells and does not secure any other DR&R obligations.

AIX requested a reduction of its AOGCC bonding to the $200,000 already in place.

The commission said it found the third-party engineering cost estimate to P&A the wells to be reasonable. It also found the MHTLO certificate of deposit is exclusively for P&A costs and said it "will be accounted for in AIX's bonding obligation to the AOGCC."

The commission said the $500,000 bond with DNR "is for the DR&R of the surface of DNR's leases to a condition acceptable to DNR. No evidence was offered that any of that bond is irrevocably restricted to the costs to properly P&A AIX's wells," and said AIX's bonding requirements would not be reduced by the amount of the DR&R bond.

The commission ruled that AIX's bonding requirement "stands at $200,000 and no increase is required at this time."

- KRISTEN NELSON

See full story in April 5 issue, available online Friday, April 3, at www.PetroleumNews.com

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